As part of this year’s NIRI conference, OTC Markets Group worked with the team to organize and moderate a panel of industry experts dedicated to addressing the needs of small cap IR professionals.
Below are key take-aways from our panel:
Small Cap IR Summit: New Ideas for Creating Interest & Value
Leo Hinkley, Managing Director, Investor Relations, BBX Capital said it best, “If people don’t know you exist, they can’t buy you.” His philosophy is to be featured on as many screens as possible and to become as innovative as technology will allow. But, he cautions this must all be done with an eye towards compliance and remaining inside the bounds of Reg. FD.
Your primary goal is to ensure that information about your company is easily accessible to investors. Take steps to establish a strong web presence – post your IR presentations and earnings presentations to your website, film analysts events, webcast investor days and use social media to amplify your corporate news and brand messaging.
Find your niche:
When it comes to attracting buy-side interest, start by taking a hard look at your company and your peers. Most firms operate under a specific mandate, so you need to do your homework to determine which firms might be a good fit for your company.
- What is your company’s valuation? Look at firms that have holdings in the small cap space
- Look at your sector – who’s investing in your industry?
- Do you pay a dividend? Income-focused investors may be a good target for your company
- Explore family offices vs. standard institutional portfolio managers
Studies have suggested that for companies under $500 million, 80% of their stock was actually held by retail investors – making this audience an organic fit and a key target for small cap companies.
Make the most of your Event Calendar:
With a new conference popping up on virtually a daily basis, its important to find the ones that are reputable and tailored to the Small Cap market. Suggestions as to some of the more popular events included: LD Micro; Marcum; Sidoti; Virtual Investor Conferences and events sponsored by the CFA Institute.
Other tips included scheduling an Analyst Day in conjunction with a group of companies similar to yours. This collective approach gives people a greater incentive to attend and helps make the most of their travel and itinerary.
Everyone acknowledged that while research is vital to investors, it has become increasingly difficult for most small-cap companies to garner coverage. This shows that a more novel approach is often needed to get to the desired result. First, look at the analysts that cover your peers and your industry/sector. They may be willing to meet with you to learn more about the industry and deepen their knowledge. The sell-side can also prove to be another great access point. Look at smaller boutique banks or firms that you aspire to work with,but be realistic about your short list and the timeline to getting there.
Another option is to arrange meetings with Institutional Sales staff. They will often bring forth and highlight shareholder questions, which works well if you don’t presently have coverage.
And lastly, quality sponsored research is often a favorable tool when looking to provide investors with access to information about your company. Look for reputable firms that leverage the same analysts to cover their company-sponsored research who also cover traditional coverage. OTC Markets Groups’ research marketplace includes three firms that should be considered by t companies interested in generating coverage.
Watch out for Red Flags:
There still a lot of sharks looking to prey upon small companies. Thus, IR professionals need to keep their guard up, proceed with caution and take a more critical look at the opportunities with which they are presented. For example, partners and vendors that are reputable will want to get paid in currency/dollars. If someone asks for stock in your company, rather than a check – that’s a red flag. One important suggestion is to carefully read the “about us” and “disclosure” pages as a way to further examine the details on exactly what these service providers are offering.
On behalf of the team at OTC Markets… a special thanks to my fellow panelists:
- David Calusdian, President, Sharon Merrill Associates
- Leo Hinkley, Managing Director, Investor Relations, BBX Capital
- Randy Renfrow, Partner, DePrince, Race & Zollo, Investment Advisors
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